Niagara Gazette — In 2010, Congress acted to eliminate the middle man and now the government deals directly with the debtors.
So, whether being the lender indirectly or directly, Uncle Sam has always demanded and/or strived to give out funds ad nauseam under that wanton desire to be benevolent that drives Big Government, especially since government has what is believed to be unlimited backing (the taxpayers and Federal Reserve) to make good on bad lending decisions. The federal government currently backs 90% of new student loans.
With the ability to borrow the capital necessary to fund their degrees, Americans have taken to the classroom in numbers. In 1965, at the start of the government’s lending efforts, only 23 percent of the middle class had received any education beyond the twelfth grade. Now, more than 3 in 10 have a degree, while a whopping 70 percent of young Americans enter college within 2 years of their high school graduation. 20 million Americans -- 1 in every 15 -- attend college every year. Just like it seemed as if everyone in 2006 was a homeowner (prior to the bursting of the housing bubble), it seems like everyone is college student.
And, just like construction firms, realtors, resellers and the like fed off of a freewheeling mortgage market at the turn of the century, driving up housing prices (it was not uncommon to see 80% to 150% increases across the country from 2000 to 2006), universities are capitalizing on the freewheeling student loans and the widely-held misconception that everyone needs a college education. Knowing that everyone – the poor, middle class, and rich – all have access to funds and will buy their product, they are charging what they want and whatever the market can bear.
Because of these factors, education costs have grown at a rate beyond inflation. Tuition and fees at public universities rose 4.8 percent in 2012 to an average of $8,655, while allegedly-nonprofit private colleges increased tuition and fees by 4.2 percent to $29,056. That’s par for the course: Since 1985 the college education inflation rate has risen nearly 500%, more than 4.3 times the amount of all other consumer prices.